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Amazon Autos wants to sell used cars—here’s what it can’t screw up

Amazon Autos wants to sell used cars—here’s what it can’t screw up

How both consumers and dealers can win

Anna del Villar & Car Dealership Guy
March 27, 2025

Hey, everyone — Last week, I unpacked Nissan’s bold push to win back U.S. dealers.

But after seeing the results of the poll I ran… most of you think the ship has already sailed.

Here’s the breakdown of 200+ responses:

Do you think Nissan will turn things around?
🟥🟥🟥🟥🟥🟥 No way (48%)
🟩🟩🟩⬜️⬜️⬜️ Yes, for sure (29%)
🟨🟨🟨⬜️⬜️⬜️ Who knows (23%)

Bottom line—Nissan might be saying all the right things, but the actual proof will come from the showroom floor.

—CDG

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Before I started writing this newsletter, I was catching up on the news and found this headline: Carvana Could Become 'Amazon of Auto Retail,' Morgan Stanley Analysts Say.

Funny timing—because Amazon $AMZN ( ▼ 0.99% ) seems to be working on that too… Last week, Amazon Autos revealed that (in addition to its new car sales partnership with Hyundai dealers) the platform is prepping to sell used cars on behalf of dealers as well.

The details? Practically none. And my chat with Amazon Autos reps (off the record at their request) didn’t add much clarity.

But if I were in charge—I know the three non-negotiables I would prioritize to align customer experience and dealer profitability—without asking either side to lose…

Non-negotiable #1: Dealers need to keep their F&I profits—or they won’t list their best used cars.

The back-end—(think service contracts, GAP insurance, add-ons, etc.)—is vital and typically makes up around 50% of a dealer’s total profit.

The current reality: I’ve heard from several Hyundai dealers on Amazon Autos’ new car pilot program that back-end profits aren’t there yet.

Sonic Automotive’s Jeff Dyke says warranty penetration falls from 60-65% in-store to 35% on the platform.
And one Hyundai dealer in it from the start (and staying anonymous) told me his first 20 Amazon Autos deals brought in zero on the back-end.

The reason? CDG follower and finance manager Justin Amorim thinks it’s because there is no guidance from the dealer on these products…

The risk? The same might happen for used cars. It reminds me of early Carvana $CVNA ( ▲ 1.01% ) when dealers tee’d up low-end stock to the platform since Carvana kept the back-end profit (spoiler alert: Carvana shut down the program to reduce cash burn). I’m pretty confident Amazon’s not going to pull that move, but if used car back-end profits naturally slump—it could end up just like a wholesale channel (aka where dealers dump their unwanted cars).

How Amazon can solve it: Let dealers present their F&I menus at pickup/delivery or digitally—instead of “added services and protection” web modules only. Or better yet—allow dealers to upload a quick video of their F&I presentation directly to the vehicle display page.

Non-negotiable #2. Used car listings have to reinforce value—otherwise, price becomes the only lever.

The current reality: Amazon is a world-class retailer of commoditized products (like new cars)—but the used car market is a whole different beast. Every vehicle is different. Every deal is different. And profit is earned through a thousand micro-decisions.

So, when it comes down to justifying used car pricing—90% of the job is being able to tell the story behind the car. That’s where dealers excel over static listings. Real talk… have you seen some of the “seller’s notes” on third-party aggregators lately? I can’t believe how clunky and awkward most of them are.

The risk? If Amazon doesn’t give dealers good UX tools to explain why one car is worth more than another—price becomes the only differentiator. And then—it’s a race to the bottom.

How Amazon can solve it: Start with visual cues—like badges for recent service along the lines of “fully reconditioned” or “single-owner trade.” (imo—this is way more valuable to consumers than “good deal” or “great deal.”) Amazon could also leverage an auction partnership to curate an inspection checklist for each listing—like Carvana does.

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Non-negotiable #3. Any return policies must minimize dealer exposure.

I heard through the grapevine that Amazon Autos is kicking around the idea of a return policy for used cars when the platform eventually launches.

But some dealers currently in Amazon’s new car pilot program aren’t convinced.

Walking through the math: Say a car sells on day 1. It takes 2–3 days to pick up/deliver. Then, the (hypothetical) 7-day return clock starts. And if the buyer initiates a return on day 6? That car has been effectively “off-market” for nearly two weeks. And it might come back worse for wear.

The risk? The depreciation that happens while the vehicle is stuck in “limbo” and—more importantly—mounting floorplan expenses.

How Amazon can solve it: Set clear eligibility rules for which vehicles can be returned—based on age, price point, or mileage—and help dealers absorb any hits to the bottom line with some sort of resale buffer program.

Bottom line: As long as Amazon isn’t holding inventory on its own balance sheet and is relying on dealers to power the platform, its used car play will live or die by how well it aligns with dealer economics.

Amazon Autos doesn’t need to reinvent used car retailing—it just needs to recognize the mechanics that make it profitable. If Amazon tries to change the process too much at the dealer’s expense—it could alienate sellers and reduce the overall quality of inventory—which is bad for everyone. But if Amazon embraces the complexities—and builds tools that make those dealer levers more powerful, not less—it has a shot at creating something rare.